A UK-Focused Guide to Raising Money: FAQs
A plain-English cheat sheet for Founders & Business Leaders new to the UK investment landscape.
1. The Business Journey – Simple Stages
What are the typical funding stages investors think about?
Investors categorize growth into stages based on milestones and revenue:
| Stage | You have... | Money is mainly to... |
|---|---|---|
| Idea / Pre-start | Concept, maybe a deck. Little/no revenue. | Get the idea off the ground. |
| Pre-seed | Prototype, first users or pilots. | Test market & hire key people. |
| Seed | Live product, clear problem/solution fit. | Prove repeatable sales models. |
| Series A | Consistent, scalable revenue. | Scale operations & build out team. |
| Series B/C+ | High growth, significant market share. | Global expansion or acquisitions. |
| Private Equity | Mature, profitable operation. | Buy-outs or partial exits for founders. |
2. Main Ways to Raise Money in the UK
What are my Non-Equity (Non-Dilutive) funding options?
2.1 Non-equity (keep 100% control)
- Bootstrapping: Funding from personal savings or early customer sales.
- Innovate UK Grants: Non-repayable funds for R&D. Typical grants range from £100k to £500k.
- Start Up Loans: Gov-backed personal loans (up to £25k per founder). Fixed 6% interest.
- Revenue Finance: Funding based on future revenue. Repayments tied to turnover.
What are the Equity options and why do SEIS/EIS matter?
2.2 Equity investment (shares for cash)
In the UK, early-stage investment is heavily driven by tax incentives:
- Angels & SEIS: "Seed Enterprise Investment Scheme." Individual investors get 50% income tax relief. Vital for pre-seed rounds up to £250,000.
- VCs & EIS: "Enterprise Investment Scheme." Professional investors get 30% tax relief. Most UK Seed funds mandate EIS eligibility.
- Equity Crowdfunding: Platforms like Crowdcube allow the public to invest alongside angels.
- Corporate VC: Larger companies investing for strategic benefit or tech access.
3. Typical Stage vs. Money vs. Equity
How much equity should I expect to sell in a typical round?
Common UK benchmarks. Founders usually aim to sell 15-25% per round.
| Stage / Round Type | Typical Raise (UK) | Equity Usually Sold* |
|---|---|---|
| Friends & Family | £10k–£150k | 5–15% |
| Pre-seed (SEIS) | £100k–£250k | 10–20% |
| Seed (EIS) | £500k–£2m+ | 15–25% |
| Series A (VC) | £2m–£10m+ | 15–25% |
| Series B+ | £10m–£50m+ | 10–20% per round |
*Combined percentage given to new investors in the round.
4. Equity, Valuation, and Dilution – In Plain English
What do "Valuation" and "Dilution" actually mean?
- Pre-money Valuation: Value agreed before cash enters the bank.
- Post-money Valuation: Pre-money + New Cash investment.
- Dilution: Issuing new shares reduces your percentage, but your shares are now part of a more valuable company.
Calculation Example
Scenario: £1,000,000 (Pre) + £250,000 (Cash) = £1,250,000 (Post).
Result: Investor owns 20% (£250k / £1.25m). Your ownership drops to 80%.
5. Matching Options to Stage – Including SEIS/EIS
Which funding options match my business stage and tax status?
| Business Stage | Best Funding Source | Tax Incentive Focus |
|---|---|---|
| Idea / Prototype | Bootstrapping, F&F | N/A |
| Early Pre-seed | Angels, Syndicates | SEIS (50% relief) |
| Seed Growth | Seed VCs, Crowdfunding | EIS (30% relief) |
| Scaling Revenue | Growth VCs, Venture Debt | EIS (Up to limits) |
| Market Leader | Private Equity | N/A |
6. Quick Glossary
What are the key terms and 2026 limits I need to know?
- SEIS: Seed Enterprise Investment Scheme. Max raise: £250,000.
- EIS: Enterprise Investment Scheme. 2026 Annual limit: £10,000,000. Lifetime limit: £24,000,000.
- Runway: Months until cash depletion based on current burn rate.
- Cap Table: Spreadsheet showing ownership percentages.
- Term Sheet: Document outlining primary terms of a deal.